Gold & Silver Daily

Ed's Critical Reads

Jul 29, 2014

Pending Home Sales Tumble From Recovery Highs, Biggest Miss in 2014

Following last week's collapse in new home sales (and last month's massive beat and surge in pending home sales), it was likely not a total surprise that pending home sales would slow, but the -1.1% MoM print is the worst in 2014 (and the biggest miss in 2014). The median existing home price continues to rise (up 4.3% year-over-year) but this is the slowest rate of gain since March 2012. NAR is quick with the excuses and this time.. no weather is to blame.

Lawrence Yun, NAR chief economist, says the housing market is stabilizing, but ongoing challenges are impeding full sales potential. “Activity is notably higher than earlier this year as prices have moderated and inventory levels have improved,” he said. “However, supply shortages still exist in parts of the country, wages are flat, and tight credit conditions are deterring a higher number of potential buyers from fully taking advantage of lower interest rates.”

Yun forecasts existing-homes sales to be down 2.8 percent this year to 4.95 million, compared to 5.1 million sales of existing homes in 2013. The national median existing-home price is projected to grow between 5 and 6 percent this year and in 2015.

This worthwhile read, which includes a couple of excellent charts, was posted on the Zero Hedge website site at 10:06 a.m. EDT Monday morning---and I thank reader M.A. for today's first story.

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Sluggish New Housing Sales Threaten Economy

New home sales plunged 8.1 percent in June, putting the decline at 4.9 percent for the first half of the year, and that's not good news for the economy.

"Housing has clearly been a notable area of persistent sluggishness beyond early-year weather disruptions," Ted Wieseman, an economist at Morgan Stanley, told The Wall Street Journal.

The economy contracted 2.9 percent in the first quarter, though many analysts expect it to grow nearly 3 percent for the rest of the year.

Home sales have suffered from buyers' lingering fear after last decade's housing bust, the sharp rise of home prices last year and the surge of student-loan debt, John Burns, CEO of John Burns Real Estate Consulting, told The Journal.

I believe I posted a story about this on Friday or Saturday, but this story from Sunday courtesy of West Virginia reader Elliot Simon, sort of fit here, so you can read about now if you missed it last week.

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The Typical Household, Now Worth a Third Less

Economic inequality in the United States has been receiving a lot of attention. But it’s not merely an issue of the rich getting richer. The typical American household has been getting poorer, too.

The inflation-adjusted net worth for the typical household was $87,992 in 2003. Ten years later, it was only $56,335, or a 36 percent decline, according to a study financed by the Russell Sage Foundation. Those are the figures for a household at the median point in the wealth distribution — the level at which there are an equal number of households whose worth is higher and lower. But during the same period, the net worth of wealthy households increased substantially.

The Russell Sage study also examined net worth at the 95th percentile. (For households at that level, 95 percent of the population had less wealth.) It found that for this well-do-do slice of the population, household net worth increased 14 percent over the same 10 years. Other research, by economists like Edward Wolff at New York University, has shown even greater gains in wealth for the richest 1 percent of households.

This article appeared on The New York Times website on Saturday sometime---and it's the second contribution in a row from Elliot Simon.

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This stock bubble is ‘beyond 1929 and 2007,’ says John Hussman

John Hussman can generally be counted on for a bearish take on the stock market. But his latest weekly commentary letter is a doozy, with some particularly pointed remarks aimed at investors who continue to believe valuations are fair in stocks.

The economist runs Hussman Funds, and since the financial crisis he’s been a prominent critic of Federal Reserve policy. His investment choices are concentrated in “defensive” positions in stocks and U.S. Treasurys. And if you take a look at his writing, it’s no secret why. Here’s the money quote from the latest commentary:

Make no mistake – this is an equity bubble, and a highly advanced one. On the most historically reliable measures, it is easily beyond 1972 and 1987, beyond 1929 and 2007, and is now within about 15% of the 2000 extreme. The main difference between the current episode and that of 2000 is that the 2000 bubble was strikingly obvious in technology, whereas the present one is diffused across all sectors in a way that makes valuations for most stocks actually worse than in 2000.

This news item showed up on the Internet site at 3:58 p.m. EDT on Sunday afternoon---and it's the first offering of the day from Roy Stephens.

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Marc Faber predicts 20% to 30% drop in stocks

Permabear Marc Faber said Monday he expects stocks to drop 20 percent 30 percent by October.

"Don't forget many stocks are already down 10 percent. The home builders are down roughly 15 percent. Airlines have just dropped around 10 percent," he said on CNBC's "Halftime Report."

Faber, publisher of the "Gloom, Boom & Doom Report," also noted that several large-cap stocks were down by double-digit percentages.

"So, we're not exactly in a uniformly strong market," he said. "The Russell 2000, which represents 2,000 companies, is down 2 percent for the year. And big deal, the S&P is up 6 percent, whereas the Philippines, Indonesia, India, Thailand, Vietnam are all up between 15 percent and 25 percent."

This 2:55 minute CNBC video clip showed up on their website around 11 a.m. EDT on Monday---and I thank reader Ken Hurt for sending it our way.

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Banks Cash in on Mergers Intended to Elude Taxes

Jamie Dimon, the chief executive of JPMorgan Chase, recently said, “I love America.” Lloyd Blankfein, the chief executive of Goldman Sachs, wrote an opinion article saying, “Investing in America still produces the best return.”

Yet guess who’s behind the recent spate of merger deals in which major United States corporations have renounced their citizenship in search of a lower tax bill? Wall Street banks, led by JPMorgan Chase and Goldman Sachs.

Investment banks are estimated to have collected, or will soon collect, nearly $1 billion in fees over the last three years advising and persuading American companies to move the address of their headquarters abroad (without actually moving). With seven- and eight-figure fees up for grabs, Wall Street bankers — and lawyers, consultants and accountants — have been promoting such deals, known as inversions, to some of the biggest companies in the country, including the American drug giant Pfizer.

This article appeared on The New York Times website at 9:02 p.m. EDT last night---and I thank Phil Barlett for sharing it with us.

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Moody's cuts bank outlook to 'negative' on Ottawa's bail-in rule

Investor ratings service Moody’s has changed its outlook for Canada’s biggest banks to negative from stable, citing concerns over the Canadian government’s plan to implement a “bail-in” system in the event of a bank failure.

The “bail-in” rule, included as part of the 2013 omnibus budget bill, asserts that the federal government would not necessarily bail out a bank on the brink of failure with taxpayer money.

Instead bank bondholders would be expected to assume the risk, though there is no guarantee that deposit-holders would not be hurt if they had more money in the bank than the $100,000 guaranteed by CDIC.

Canada has yet to set parameters for how a bail-in might work. Mark Carney, who was Bank of Canada governor at the time, said last April it was 'hard to fathom' a scenario where Canadians' deposits would be touched, as happened in the Cyprus bank failure.

This news item appeared on the Internet site way back on July 8, but for all Canadian citizens, it's still worth reading.  I thank reader Dave Malek for bringing it to our attention.

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U.S. Pollack confirms meeting with Argentine delegation tomorrow, without holdouts

Argentina will send a negotiation team to New York today for further talks with a US court-appointed mediator Daniel Pollack in its debt dispute with "holdout" investors, Cabinet Chief Jorge Capitanich said earlier, with just three days left to avert a default. In a statement released today, Pollack confirmed he will be receiving the Argentine delegation at his office tomorrow at 12 pm (Argentina time) and he "urged direct, face-to-face conversations with the Bondholders, but that will not happen tomorrow."

Argentina has until Wednesday to either pay the New York hedge funds suing for full repayment on their bonds or reach a deal.

Otherwise, barring a suspension of the court-ordered July 30 deadline, Argentina will default for the second time in 12 years.

Here's an update on Argentina's bond situation.  This article was posted on the Buenos Aires Herald website yesterday sometime---and I thank reader M.A. for sending it our way.

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U.K.'s Lloyds Bank fined total of $370 million for rigging Libor

That will teach them!

Having received full credit for for co-operation and suspending some individuals, Lloyds Bank has been fined by the CFTC the staggeringly wrist-slap-like sum of $105 million for the "manipulation, attempted manipulation, and false reporting of Libor."

Total fines will amount to around $370 million across all UK and US regulators and all Lloyds divisions.

As the WSJ reports, the British bank becomes the seventh financial institution to strike a deal with U.S. and U.K. authorities who are conducting a long running probe into allegations of widespread attempts to manipulate Libor. With no less than the head of the Bank of England calling the bank's actions (manipulating JPY Libor for at least 2 years) "reprehensible," and the CFTC adds individuals behavior was a "gross breach of trust." Well we are sure after this they will never manipulate another market ever again.

Another licensing fee---and nobody is going to jail.  This Zero Hedge news item appeared on their website at 9:04 a.m. EDT on Monday morning---and I stole the headline from a GATA release, but the story itself is courtesy of reader M.A.  There's also a Reuters story about this linked here.

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The pound is overvalued, warns the IMF

The IMF has warned that the pound is overvalued by 5pc-10p, in an update of its wide-ranging annual assessment of Britain's economy.

After depreciating by 23pc between 2007 and 2009, the real exchange rate has gradually appreciated, and this trend accelerated from the middle of 2013, the fund said, as it praised the Bank of England for keeping interest rates low and welcomed signs that Britain's surprisingly strong economic recovery is broadening.

A high pound could affect the rebalancing of the economy, according to the staff report. A strong currency depresses domestic demand and encourages spending on imports.

"Further demand rebalancing is needed: net trade has made only a modest contribution to the recovery, and the real exchange rate is moderately overvalued," the report said on Monday.

This news item was posted on The Telegraph's website at 4:58 p.m. BST on their Monday afternoon---and I thank South African reader B.V. for sharing it with us.

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Keep U.K. interest rate low for now, IMF tells Bank of England

The International Monetary Fund has said U.K. interest rates should stay low for now, but the Bank of England policymakers must be ready to raise them should other measures fail to keep the housing market in check.

The IMF said that so-called macro-prudential measures should be the "first line of defence" against financial stability risks from the housing market. But ultimately more must be done to raise the supply of housing to meet demand, it said, echoing warnings from economists and the Bank of England's governor, Mark Carney.

The Washington-based IMF also warned of a check to George Osborne's ambitions to rebalance the economy towards manufacturing, as it warned that sterling was "moderately overvalued", while net trade has not been a strong factor in the economic recovery.

This article appeared on Internet site at 5:50 p.m. BST yesterday---and in some respects is similar to the story from The Telegraph that precedes it.  This is the second offering of the day from Roy Stephens.

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Russia Says West Taking No Action to Settle Ukraine Conflict

Russian Foreign Minister Sergei Lavrov reproached western countries Monday for their lack of political proposals to resolve the crisis in Ukraine, saying they are merely making demands of Russia and threatening sanctions.

“I have neither seen nor heard of any political initiatives from our western colleagues,” Lavrov told journalists.

“There were the Berlin agreements, now there are the agreements promoted within the OSCE. I want to ask our Western colleagues what their contribution to a political resolution is,” Lavrov said, criticizing the leaders for refusing to support the agreements made in the UN Security Council and the Organization for Security and Co-operation in Europe.

Lavrov said Russia’s western partners only say that Moscow needs to change its policy toward Ukraine.

This RIA Novosti news item, filed from Moscow, appeared on their website at 2:15 p.m. Moscow time on Monday, which is 6:15 a.m. EDT.  It's another offering from Roy Stephens.

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'Fake': Russian Defence Ministry rebuffs U.S. satellite image claims

Russia’s Defense Ministry has stated that “fake” satellite images of alleged shelling of Ukraine from Russian territory were created by U.S. counselors “with close links to Ukraine’s Security Council.”

The authenticity of the images is impossible to prove, the ministry added.

The Defense Ministry stated that the images posted by the U.S. ambassador Geoffrey Pyatt on his Twitter account, allegedly proving the shelling of Ukraine from Russian territory, are “fake,” ITAR-TASS reports.

“These materials were posted to Twitter not by accident, as their authenticity is impossible to prove – due to the absence of the attribution to the exact area, and an extremely low resolution. Let alone using them as ‘photographic evidence’,” Igor Konashenkov, the official representative of the ministry, stated.

This Russia Today story appeared on their website at 11:29 a.m. Moscow time yesterday morning---and it's also courtesy of Roy Stephens.

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‘Refusing to kill their own’: Over 40 Ukrainian soldiers flee to Russia

More than 40 Ukrainian soldiers have abandoned their military posts and crossed into Russian territory, stating that they refuse to fight against their own people, a Russian Federal Security Service spokesperson said.

At least 41 Ukrainian soldiers have made it to Russian territory after asking self-defense forces for help, the spokesperson from the Federal Security Service’s Rostov region border patrol unit, Vasily Malaev, told Itar-Tass.

"At around 20:30 Moscow time, 41 Ukrainian soldiers left their military bases and arrived at the Ukrainian border crossing checkpoint Izvarino. They appealed to the militia there for help to with cross into the Russian territory, in connection with the fact that they do not want to fight against their own people,” Malaev said.

All of the soldiers were able to cross into Russia at the Donetsk checkpoint, the spokesperson added.

This story appeared on the Russia Today Internet site at 2:00 a.m. Moscow time on their Sunday morning, which was 6 p.m. in New York on Saturday evening.  I thank Roy Stephens for sending it.

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Canadian Prime Minister Stephen Harper pens editorial about Russia for Globe and Mail

Prime Minister Stephen Harper says the western world can’t soften its tough stand toward Russia over the crisis in Ukraine, even at the expense of the economy.

In an unusual move, Harper has written an editorial on the situation in Ukraine that was published in Saturday’s Globe and Mail.

He writes that although militants in eastern Ukraine are referred to as ‘pro-Russian separatists,’ there is no doubt they are “an extension of the “Russian state.”

Harper accuses Russia of “aggressive militarism” that he says is a threat to not only Ukraine, but Europe and the values that bind Western nations.

As a Canadian, I'm totally embarrassed---and this shows you just how much this government has sold itself out to the Americans.  Harper can lie his ass off just as well as the rest of the leaders in the West.  This short CP article, filed from Toronto, was posted on the Internet site on Saturday---and it's also courtesy of Roy Stephens.

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Court orders Russia to pay $50 billion for seizing Yukos assets

An international arbitration court ruled on Monday that Russia must pay $50 billion for expropriating the assets of Yukos, the former oil giant whose ex-owner Mikhail Khodorkovsky fell foul of the Kremlin.

Finding that Russian authorities had subjected Yukos to politically-motivated attacks, the panel made an award to a group of former Yukos shareholders that equates to more than half the entire fund Moscow has set aside to cover budget holes.

Russia, whose economy is on the brink of recession, said it would appeal the ruling by the Dutch-based panel, which judges private business disputes. It also said the "politically biased decision" was based on "current events" - an apparent reference to Moscow's dispute with the West over Ukraine.

Independent lawyers said it would be difficult to enforce the award to shareholders in the GML group, who had claimed $114 billion to recover money they lost when the Kremlin seized Yukos a decade ago.

This Reuters article, co-filed from Moscow, London and Amsterdam showed up on their Internet site at 4:38 p.m. EDT on Monday evening---and I thank Elliot Simon for bringing it to our attention.

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U.S. Says Russia Tested Cruise Missile in Violation of Treaty

The United States has concluded that Russia violated a landmark arms control treaty by testing a prohibited ground-launched cruise missile, according to senior American officials, a finding that was conveyed by President Obama to Russian President Vladimir V. Putin in a letter on Monday.

It is the most serious allegation of an arms control treaty violation that the Obama administration has leveled against Russia and adds another dispute to a relationship already burdened by tensions over the Kremlin’s support for separatists in Ukraine and its decision to grant asylum to Edward J. Snowden, the former National Security Agency contractor.

At the heart of the issue is the 1987 treaty that bans medium-range missiles, which are defined as ground-launched ballistic or cruise missiles capable of flying 300 to 3,400 miles. That accord, which was signed by President Ronald Reagan and Mikhail S. Gorbachev, who was then the Soviet leader, helped seal the end of the Cold War and has been regarded as a cornerstone of American and Russian arms control efforts. Obama administration officials concluded by the end of 2011 that the cruise missile test was a compliance concern, officials have said. Rose Gottemoeller, the State Department’s senior arms control official, first raised the violation concern with Russian officials in May 2013.

Surely they jest?  Someone's hands must have been shaking when they posted this piece of garbage on The New York Times website on Monday.  If this isn't a perfect example of the pot calling the kettle black, I don't know what is.  It's also courtesy of Roy Stephens.

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Bulgaria's Prime Minister resigns as banking crisis unfolds

The Prime Minister of Bulgaria Plamen Oresharski has resigned his post. His decision came after accusations by opponents of failing to cope with the worst banking crisis in 17 years.

The decision was supported by 180 lawmakers in the parliament, only 8 voted against, and 8 abstained, reports Bloomberg.

The Oresharski government lasted for only 16 months of the 4 years it was elected for. New elections on October 5 will see the country’s fifth prime minister since Bulgaria joined the European Union in 2007.

“My cabinet worked in unprecedented conditions of hostility…Despite that we achieved good results. All business indicators improved in the year we ruled,” Reuters quotes Oresharski’s speech just before the vote.

This story put in an appearance on the Russia Today website at 3:06 p.m. last Friday afternoon Moscow time---and I thank Harry Grant for sending it.

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Facing Escalating Violence, U.S. Evacuates Staff From Its Embassy in Libya

The United States closed its embassy in Libya on Saturday and evacuated the embassy’s staff under military guard, in what the State Department said was a response to escalating violence in the Libyan capital, Tripoli.

Officials called the evacuation “temporary” and said they were looking for ways to reopen the embassy, even as the State Department issued a new travel warning on Saturday, advising United States citizens to leave Libya “immediately.”

Weeks of heavy fighting between rival Libyan militias for control of Tripoli’s international airport had in recent days edged closer to the heavily fortified embassy, which is on the main road to the airport. The clashes have all but destroyed the airport, severely limiting air travel to Libya.

This article appeared on The New York Times website on Saturday sometime---and I think it's worth reading.  Once again I thank Roy Stephens for sending it along.

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Israel says Gaza campaign will continue 'until mission is accomplished'

The war in Gaza erupted afresh on Monday as Israel warned of a protracted military campaign to destroy cross-border tunnels and disarm Hamas and other militant groups.

"We need to be prepared for a long operation until our mission is accomplished," Israeli prime minister Binyamin Netanyahu said in a televised press conference, rejecting mounting international calls for an immediate and unconditional ceasefire.

Netanyahu – who described the conflict as a "just war" - spoke after a series of dramatic events following a lull in fighting on Sunday and early Monday. Eight children playing in a park in a Gaza refugee camp were killed, the main public hospital was struck, four Israeli soldiers were killed in a mortar attack and militants from Gaza infiltrated Israel through a tunnel.

This story showed up on Internet site at 7:48 BST on their Monday evening---and it's the final offering of the day from Roy Stephens, for which I thank him.

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Singapore expresses intent to join China-led regional bank

The Republic has expressed its intention to accept China’s invitation to become a founding member of a new regional bank to fund infrastructure projects in Asia, said Singapore’s Ministry of Foreign Affairs (MFA).

Singapore’s intention was conveyed by Deputy Prime Minister Teo Chee Hean at a meeting in Beijing on Monday (July 28) with Chinese Vice-Premier Zhang Gaoli, who had invited Singapore to be part of the Asian Infrastructure Investment Bank (AIIB).

“Mr Teo and Mr Zhang discussed how the AIIB can complement existing multilateral development banks (MDBs), stay open and inclusive and draw upon the best practices of existing MDBs in terms of governance and operations,” said the MFA in a statement.

This article put in an appearance on the Internet site at 9:54 a.m. Singapore time on their Tuesday morning---and I thank reader M.A. for sliding it into my in-box late last night.

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'Corruption and elitism' fueling inequality in China: Jim Rickards

The top one percent of households in China control more than a third of the country's wealth, a study found. As analyst James Rickards tells DW, inequality is becoming so extreme it threatens to cause social disorder.

The findings published in a Peking University report released on July 25, reveal the extent of China's social inequality. "One percent of households at the top level nationwide control more than one third of the country's wealth. Twenty-five percent of families at the bottom level only own one percent of the country's wealth," the website of the People's Daily newspaper reported on the university's statistics. The main reason behind the disparity is said to be the difference between wages in the cities and the rural areas.

The report also included the Gini coefficient, a measure of income distribution with 0 representing total equality and 1 representing total inequality. Government statistics claim the figure stood at 0.47 in 2012, which would put it close to the US, which had an index figure of 0.56 in 2009, according to the World Bank.

James Rickards, a U.S. writer, lawyer and economist, says in a DW interview that China has now surpassed the U.S. in terms of income inequality, adding that both countries are approaching the point where this disparity becomes so extreme that it threatens to cause social disorder.

This very interesting interview was posted on the Internet site yesterday---and I thank reader Harold Jacobsen for finding it for us.

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Eight King World News Blogs/Audio Interviews

1. Michael Pento: "Forget the Propaganda, This is What's Really Happening"  2. John Embry: "The Shocking Reason Why Gold May Quickly Hit $2,000"  3. Robert Fitzwilson: "Investors Must Prepare Now For Chaos and Wealth Destruction"  4. Andrew Maguire: "Hundreds of Tons of Gold Bought By East in 14 Days"  5. James Turk: "Expect a Wild Trading Week in the Gold and Silver Markets"  6. Richard Russell: "I'm Afraid We Will See Blood in the Streets"  7. The first audio interview is with Andrew Maguire---and the second audio interview is with Art Cashin

[Please direct any questions or comments about what is said in these interviews by either Eric King or his guests to them, and not to me. Thank you. - Ed]

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Technical analysis of markets begins to suspect its obsolescence

Acknowledging that the usefulness of technical analysis is increasingly doubted as market manipulation intensifies, newsletter writer and technical analyst Tim W. Wood notes today that manipulation is as old as markets themselves and quotes various authorities to the effect that manipulation cannot long defeat any market's "primary trend."

But Wood's authorities all precede the seizure of absolute economic power by the U.S. government, implemented by the Federal Reserve and Treasury Department and Treasury's Exchange Stabilization Fund -- the power to create infinite amounts of money and to trade secretly in any market, power that even former central bankers now acknowledge as "financial repression."

Wood argues that "the very basis of technical analysis is that everything is discounted into price."

Really? So on April 11, 2013, did technical analysis forecast the coordinated and overwhelming attack on the gold market by central banks that would begin on the following day? Does the foresight of technical analysis today really extend into government chancelleries as policies are decided privately and then implemented by intermediaries through various instruments and mechanisms, from derivatives to high-frequency trading?

As you are well aware, dear reader, I have always trashed technical analysis of the precious metal markets for all the reasons given in this story---and that can now be said about the equities market.  This longish commentary by Chris Powell was embedded in this GATA release from late last night EDT---and it's definitely worth reading.  As Chris said back in April 2008---"There are no markets anymore, only interventions."

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"London Fix" Gold Rigging By Bullion Bank Exposed In Class Action Lawsuit: The Complete Charts

Some interesting news crossed the tape late afternoon yesterday when it was reported that the silver bullion banks (Deutsche Bank, Bank of Nova Scotia and HSBC) were sued for manipulating the silver fix in a class-action lawsuit. However, a closer look reveals that the plaintiff in the lawsuit, J. Scott Nicholson, has a recurring bone to pick with the banks as this is certainly not his first lawsuit alleging precious metals rigging, and as such we are convinced it will be tossed out shortly, along with every other lawsuit alleging a manipulated precious metals market since discovery could lead to some very unpleasant revelations about the primary source of gold and silver rigging: the central banks themselves, alongside the BIS.

Instead, we uncovered something that was missed several few weeks earlier: a far more informative and detailed class action lawsuit filed by Edward Derksen on July 9, 2014 against the London gold fix member banks: Bank of Nova Scotia, Barclays, Deutsche, HSBC and SocGen (profiled here in From Rothschild To Koch Industries: Meet The People Who "Fix" The Price Of Gold).

Recall from "How Gold Price Is Manipulated During The "London Fix"" that this was one of the first conspiracy theories about gold manipulation to end with a bank, and following the official revelation (as opposed to merely on the pages of fringe blogs) that over 100 years the price of gold was consistently manipulated during the London fix (and during every other period as well but that is a revelation for a different time) the very process of the Gold and Silver Fix itself was finally ended (only to be replaced with a comparable process run by the very same people who manipulated gold and silver from Rothschild's London office on St. Swithin’s Lane for decades.

This very long article was posted on the Zero Hedge website at 6 p.m. EDT on Sunday evening---and it's worth your time if you have any left.  If you find the charts familiar, it's because they're all the work of Dimitri Speck and Nick Laird---and a decade in the making.  You've seen most of them in my column many times over the years.

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Possible discrepancy in GLD's gold bar accounting

The Perth Mint's Bron Suchecki calls attention to what seems like a serious discrepancy in the gold exchange-traded fund GLD's accounting of its gold bars.

The discrepancy is headlined "GLD Trade Spreadsheet vs. GLD Bar List" and is detailed at the Screwtape Files  Internet site.  I found this gold-related story embedded in a GATA release yesterday.

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Is There Gold in Fort Knox?

"Is there any gold in Fort Knox?" was one of the most frequently asked questions I got when I was the director of the U.S. Mint.

The answer is yes.

The U.S. Bullion Depository, commonly known as Fort Knox, was built to accommodate the dramatic increase in gold reserves resulting from President Franklin D. Roosevelt's controversial executive order in 1933. The gold reserves of the United States from 1933 to 1937 increased threefold to approximately $12 billion because Americans were forced to sell their gold coins to the Federal Reserve and accept bank notes instead.

Completed in 1936 on land transferred from the U.S. Army, it took more than 500 train cars to deliver the existing gold bullion, newly made bullion bars from the melted coins and some gold coins. They came mostly from Philadelphia and the New York Assay Office.

This is all very interesting, especially what he has to say in the last paragraph.  One has to wonder who has title to all this gold---and what the purity is?  Does part of this belong to Germany---and is it coin melt?  Questions with no answers---and this commentary doesn't help.  It was posted on the Internet site way back on June 6---and I thank Michael Cheverton for sliding it into my in-box just after midnight.

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Gold Bugs Meet Bitcoin Believers to Supplant the Dollar

Call it bitgold.

It’s what you get when you combine bitcoin, one of the world’s newest would-be currencies, and gold, one of the oldest. Add mistrust of centralized authority, a dash of rebelliousness and a dollop of profit motive and you might have the Independence Coin, the first gold-backed crypto-money, unveiled this month at FreedomFest, a libertarian convention in -- where else? -- Las Vegas.

“A staunch person who believes in the gold standard says bitcoin is valueless and ultimately a Ponzi scheme, and people who didn’t dig gold but really got bitcoin would say that this is ridiculous, it’s just a dumb metal,” Anthem Hayek Blanchard, chief executive officer of Anthem Vault Inc., the company behind the Independence Coin, said in an interview. “We don’t need to fight. We can coalesce.”

This very interesting Bloomberg story appeared on their Internet site at 10 p.m. Denver time on Sunday evening---and I thank Casey Research's own Laurynas Vegys for passing it around yesterday.  It's worth reading.

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Gold and bitcoin fuel demand for each other in India

In a fresh possible headache for regulators, including in India, "gold for bitcoin" trades are emerging as a new fad in the world of anonymous transactions, fueling further the appetite for virtual currencies.

This comes at a time when the count of virtual currencies available in the market is fast moving closer to the 500 mark, although the price of top-ranked bitcoin has begun showing signs of stability at around $500-$600 level after remaining highly volatile for most part of its half a decade existence.

According to bitcoin traders, the stabilisation in bitcoin rates is making the case stronger for exchanging them for gold, which currently trades at less than $1,300 per ounce or about Rs28,000 per 10 grams in India.

This is another very interesting story about gold and bitcoin---and it's worth reading as well.  It was posted on the Internet site on Sunday IST---and was filed from New Delhi.  I found it on the Internet site yesterday.

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GoldCore's O'Byrne discusses market manipulation with Jan Skoyles on 'Get Real'

Interviewed on "Get Real," the television program of The Real Asset Co.'s Jan Skoyles, GoldCore's Mark O'Byrne discusses silver's prospects, its effective greater practical rarity than gold, and manipulation of the gold and silver markets and GATA's work exposing it.

The program is 27:51 minutes long and  was posted on the Internet site last Friday.  I've only had time to listen to the first half---and up to that point I'd give it a miss.  It does improve markedly in the second half, which starts just before the 14-minute mark---and even GATA gets a mention there.  Ted Butler's name didn't come up, but just about everything silver-related in the second half of the interview has his name written all over it.  If you start watching at the 14-minute mark, you won't have missed much---and the second half is worth your time.  This silver-related story is something I found in another GATA release from yesterday.

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Financial Times deleted gold manipulation story because it was too 'sensitive'

With great persistence and a little encouragement from GATA our friend R.B. in Britain has more or less solved the mystery of the Financial Times' quick deletion from its Internet site of its February 24 report about gold market manipulation, "Fears Over Gold Price Rigging Put Investors on Alert; German and U.K. Regulators Investigate."

The explanation is pretty much what one might expect: For the Financial Times, one of the many news organizations to which GATA repeatedly has provided its full documentation of gold price suppression by Western central banks---the issue is simply too "sensitive."

In fairness to the FT, please note that the issue seems to have been too "sensitive" for all those other news organizations as well.

R.B.'s account of his repeated inquiries to the Financial Times is appended.

This must read commentary was posted on the Internet site yesterday.

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Jul 26, 2014

Q2 Closes With A Durable Goods Whimper And 1.6% Y/Y Drop; Core Capex Orders Revised Much Lower; Shipments Tumble

After tumbling in May by 1.0% which was the biggest drop since the dreaded "polar vortex", Durable goods in June posted a modest pick up in June rising 0.7%, driven by yet another surge in aircraft and parts which rose by 8.2% for Non-defense aircraft and 15.3% for defense (thank you Russia). And while this beat expectations of a 0.5% increase, it was the first Y/Y drop in Durable goods since February (and since 2013 if one uses unrevised data).

Excluding volatile transportation, Durable Goods rose by 0.8%, also beating the expected 0.5% print, and higher than last month's 0.1%. Still, the Y/Y change in the category is hardly indicative of sustainable growth in manufacturing production, and certainly smashes any of the ISM and Markit PMI manufacturing surveys indicating an epic renaissance in U.S. production.

This interesting Zero Hedge commentary, with some excellent charts, was posted on their website at 8:57 a.m. EDT Friday morning---and I thank reader M.A. for sending it along.

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Money Manager Sanford: 'Stay Out of Money Market Funds' After SEC Rules

The Securities and Exchange Commission approved rule changes for money-market funds this week — some good and some bad, says James Sanford, a portfolio manager for Sag Harbor Advisors.

On the good side, the SEC now requires a floating net asset value rather than a fixed $1.00 par value for the funds, he writes on

"However, the other proposed change, which would allow money managers to suspend redemptions by investors or charge them fees to redeem during volatile periods, is a travesty."

This short article was posted on the Internet site at 10:22 a.m. EDT yesterday morning---and I thank West Virginia reader Elliot Simon for sharing it with us.

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Record Student-Loan Debt Prompts Treasury Push to Stem Defaults

The U.S. Treasury, which finances more than 90 percent of new student loans, is exploring ways to make repayment more affordable as defaults by almost 7 million Americans and other strapped borrowers restrain economic growth.

Leading the effort is Deputy Secretary Sarah Bloom Raskin, who became the department’s No. 2 official in March after more than three years as a Federal Reserve governor. As higher-education debt swells to a record $1.2 trillion, Raskin, 53, is alert to parallels to the mortgage crisis.

Raskin has reason to worry: Most of those loans are backed by the federal government. In addition to trying to facilitate stronger growth, she’s focusing on the impact such debt has on government’s financing needs and ways to improve servicing and collection.

This news item was posted on the Bloomberg website at 10:00 p.m. Denver time on Wednesday evening---and it's the second offering in a row from Elliot Simon.

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In a Subprime Bubble for Used Cars, Borrowers Pay Sky-High Rates

Rodney Durham stopped working in 1991, declared bankruptcy and lives on Social Security. Nonetheless, Wells Fargo lent him $15,197 to buy a used Mitsubishi sedan.

“I am not sure how I got the loan,” Mr. Durham, age 60, said.

Mr. Durham’s application said that he made $35,000 as a technician at Lourdes Hospital in Binghamton, N.Y., according to a copy of the loan document. But he says he told the dealer he hadn’t worked at the hospital for more than three decades. Now, after months of Wells Fargo pressing him over missed payments, the bank has repossessed his car.

Where have we seen this picture before, dear reader?  This article appeared on The New York Times website a week ago, but for length reasons---and it is a looong read---it had to wait for my Saturday column.  It's the first offering of many from Roy Stephens.

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Don’t Tell Anybody About This Story on HFT Power Jump Trading

Far from Wall Street in a Chicago neighborhood once synonymous with urban blight, two futures industry veterans are using secrecy and speed to mint fortunes.

Their firm, Jump Trading LLC, was all but invisible until it was among six companies subpoenaed in April by New York prosecutors. Jump has ascended the ranks of high-frequency traders during the past 15 years to become one of the top firms on the Chicago Mercantile Exchange, where $925 trillion of derivatives changed hands last year. Its annual revenue has exceeded half a billion dollars.

The company was founded by traders Bill DiSomma and Paul Gurinas, whose level heads caused them to stand out in the cacophony of a Chicago trading floor. Today, the pair parcel money among 20 or so teams, each guarding its computer models from the others to trade stocks, bonds and commodities with strategies that go almost as fast as light.

This longish Bloomberg article showed up on their Internet site at 5:01 p.m. MDT on Wednesday---and also for length reasons, had to wait for today's column.  It's the third contribution of the day from Elliot Simon.

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Sprott Money Weekly Wrap Up

Eric's weekly commentary also contains a lot of gold-related information as well.  This audio interview runs for 6:05 minutes---and was posted on the Internet site on Friday afternoon.

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Doug Noland: Bubbles and Schemes

Perhaps it’s coincidence that the ECB is commencing a major new liquidity operation just as the Fed’s QE winds down. Clearly, the “Draghi plan” to bolster fragile European peripheral debt markets should be viewed as a sophisticated financial scheme. Thus far, the Bank of Japan (BoJ) shows no indication that its “money” printing scheme is ending anytime soon. And despite all the talk that the Chinese were serious about financial and economic reform, they apparently took one alarming look at rapidly unfolding systemic fragilities and opted to let their historic Bubble run. The Chinese Bubble is a government-dictated financial scheme of epic proportions.

So it’s become an equally fascinating and alarming global dynamic: a multifaceted global scheme to support inflated securities markets and a grossly maladjusted global economic structure. Worse yet, it’s a global scheme held together by various governments that are increasingly engaged in heated geopolitical strife. In the end, “Ponzi Finance” financial schemes boil down to games of confidence.

Doug's weekly Credit Bubble Bulletin is always a must read for me---and his Friday evening missive over at the Internet site is no exception.

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Fourteen YEAR drought leaves Lake Mead at all-time low

Drought in the southwestern U.S. will deplete the vast Lake Mead this week to levels not seen since Hoover Dam was completed and the reservoir on the Colorado River was filled in the 1930s, federal water managers said Tuesday.

The projected lake level of about 1,080 feet above sea level will be below the level of about 1,082 feet recorded in November 2010 and the 1,083-foot mark measured in April 1956 during another sustained drought.

But U.S. Bureau of Reclamation regional chief Terry Fulp said water obligations will be met at least through next year without a key shortage declaration. The result will be full deliveries to cities, states, farms and Indian tribes in an area that's home to some 40 million people and the cities of Las Vegas, Phoenix and Los Angeles.

I posted a story about this more than a week ago, but this photo essay that showed up on the Internet site on July 15 is first rate---and is worth your time.  I thank William Gebhardt for sending it our way last Sunday.

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IMF fears ultra-low rates are fuelling asset bubbles

Ultra-low interest rates around the world are fuelling financial bubbles and pushing investors into overvalued assets, the International Monetary Fund has warned in a marked shift of policy.

“Financial markets have been very optimistic in recent months. Frankly, we’re seeing some prices that are very high compared with what is happening the real economy,” said Gian Maria Milesi-Ferretti, the fund’s deputy director.

“We don’t think there is a generalised bubble but this is something we have to watch closely. In a world of very low interest rates there is an incentive to take on risk and hunt for yield, and that can lead to excesses,” he said.

Olivier Blanchard, the IMF’s chief economist, said the fund is now watching financial markets “like a hawk” but said the world economy is still too fragile to withstand the introduction of tighter monetary policy. “The first line of defence should be macro-prudential tools; slowing down the housing market for example. The recovery is not very strong and really needs to be nurtured,” he said.

The IMF, ECB, BoJ---and the Fed are powerless to do anything.  After having painted Planet Earth into an economic, financial and monetary corner for the last couple of generations they, like us, can only stand by and wait for the whole thing to implode---which it will.  This Ambrose Evans-Pritchard commentary appeared on The Telegraph's website at 6:07 a.m. BST on Thursday morning---and it's the second story of the day from Roy Stephens.

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Number of French Jobless Rises to New Record

The number of people without a job in France rose in June to yet another record in the latest blow to President Francois Hollande's efforts to get unemployment falling.

The Labour Ministry said the jobless total in mainland France rose by 9,400 last month to 3,398,300, up 0.3 percent over one month and 4.0 percent over one year.

Hollande has seen his popularity collapse to record lows for a French president as he failed to live up to promises to get unemployment declining.

The Socialist leader is counting on plans to phase out 30 billion euros ($40.29 billion) in payroll tax on companies to get them investing and hiring.

This Zero Hedge piece, based on a Reuters story, showed up on their Internet site at 12:25 p.m. EDT on Friday afternoon---and I thank reader M.A. for his second offering in today's column.

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Europe Unveils Preliminary Sanctions Against Russia

While the preliminary terms of Europe's Russian sanctions were leaked on Thursday, moments ago it was reported that E.U. ambassadors have reached an agreement on what the "hard-hitting" economic sanctions against Russia would look like even as details remain to still be ironed out ahead of a formal announcement of the final terms next week. According to Reuters, key measures suggested by the Commission include: 1] closing EU capital markets to state-owned Russian banks,2] an embargo on arms sales to Moscow, 3] restrictions on the supply of energy and dual-use technologies, and 4] a list of 15 individuals and 18 entities, including companies, subject to asset freezes for their role in supporting Russia's annexation of Crimea and detribalization of eastern Ukraine.

Of course, since France would blow a gasket if its Mistral ship was impacted by the sanctions, and since this really is just another populist measure not intended to really punish Russia (as that would mean a prompt shut off of European gas and an even prompter slide into a triple dip recession if not outright depression), Europe promptly "detoothed" the sanctions by announcing that they would not affect current supplies of oil, gas and other commodities from Russia, diplomats said.

This news item, also based on a Reuters story, appeared on the Zero Hedge website at 8:27 a.m. EDT on Friday---and I thank reader M.A. for sharing it with us as well.  There's also an Ambrose Evans-Pritchard take on the sanctions story---and it's courtesy of Roy Stephens.  The headline reads "Proposed E.U. sanctions threaten to shut Russia out of the world financial system".  The website had a story on this as well.  It bears the title "E.U. to hit Russia with economic sanctions next week".  This is also courtesy of Roy Stephens.

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Canada sanctions Russian energy sector

Canadian Prime Minister Stephen Harper announced new sanctions targeting the Russian energy sector in response to the Kremlin's pressure on Ukraine.

Harper announced sanctions against 10 separate Russian entities, including Russian independent gas company Novatek and Gazprombank, the financial arm of Russian gas giant Gazprom.

The prime minister said the sanctions were meant as a response to Russia's occupation of the Crimean region in Ukraine and its military action in eastern Ukraine.

Nothing proves that Canada [via Stephen Harper] has sold out to the U.S. lock, stock and barrel, more than this piece of rubbish/propaganda that showed up on the Internet site yesterday.  I'm embarrassed to call myself Canadian.  It's another article from Roy Stephens.

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Ukraine votes to keep Western companies out of gas industry

Ukraine’s parliament has rejected allowing E.U. and U.S. companies to buy up to 49 percent of oil and gas company Naftogaz, and also said they were against liquidating the national energy monopoly.

Kiev rejected splitting the company in two, a measure encouraged by the West in order for Naftogaz to comply with Europe’s third energy package, which doesn’t allow one single company to both produce and transport oil and gas.

The bill proposed creating two new joint stock companies in order to conform to the package, “Ukraine's Main Gas Transmission” and “Ukraine's Underground Storages.”

This Russia Today article appeared on their Internet site at 12:11 p.m. Moscow time on Friday---and credit goes to Roy Stephens once again.

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Catastrophic Desertions and Losses in the Ukrainian Army - Official Ukrainian Reports, July 19, 2014

It is rare that we report on the workings of the aggressor across the battle lines. This item is different. Before you is a translation, kindly prepared by Valentina Lisitsa, of a report from the head of the Ukrainian Security Service, V.O. Nalyvaichenko, to the President of Ukraine, P.A. Poroshenko. It is an important document, which, we hope, you will distribute widely.

No further commentary is necessary, other than the following brief quotation. According to V.O. Nalyvaichenko, "2/3 of the active combat military units currently participating in the ATO will simply cease to exist in as little as 4 to 5 days" due to mass desertions and casualties. To provide context for this letter, provided below is another document recently publicized as an internal memorandum from the Ukrainian Ministry of Defence, which details recent casualties of the Ukrainian army, equally as catastrophic as its desertion rates.

This very interesting news item [if true] appeared on the Internet site yesterday---and I thank reader Nick Ferris for bringing it to our attention.

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Russia transfer of rocket system to Ukraine rebels imminent - Pentagon

The Pentagon said on Friday the transfer of heavy-caliber multiple-launch rocket systems from Russia to Ukrainian separatists appeared to be imminent with the arms close enough to the border they could be handed over "potentially today."

"We have indications that the Russians intend to supply heavier and more sophisticated multiple-launch rocket systems in the very near future," said Army Colonel Steve Warren, a Pentagon spokesman, adding that the weapons were in the over-200mm range.

Warren indicated the weapons had been seen getting closer to the border and the Pentagon believed a transfer was imminent and could happen "potentially today."

"We believe that they are able to transfer this equipment at any time, at any moment," he said.

The western main stream media is sinking to a new low just about every day.  This breathless propaganda/warmongering piece, filed from Washington, showed up on the Internet site at 2:01 p.m. EDT yesterday---and the stories from Roy just keep on coming.

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Over 40 mortar shells ‘fired to kill’ into Russia from Ukraine

At least 45 mortar shells fired at targets located inside the Rostov-on-Don region have been unleashed by Ukraine’s army, Russia’s border officials said. The barrage destroyed multiple houses and forced an evacuation of civilians.

Investigators say they were examining the site of a previous shelling near the Primiusskiy hamlet right on the southwestern edge of Russia on Wednesday, when a cannonade went off from the other side of the border.

“There is no doubt that those shooting from the Ukrainian side picked their target, and tried to kill Russian security officials,” said Investigative Committee representative Vladimir Markin.

This news item put in an appearance on the Russia Today website at 5:31 p.m. Moscow time on Friday---and it's another story from Roy S.

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Shell Leaves Business Strategy for Russia Unchanged Despite Sanctions

British oil giant is determined to continue its work in Russia and will not change its business strategy in the country, despite the sanctions imposed against Moscow by the United States and European Union, representative of Shell’s press service told RIA Novosti on Friday.

“Shell continues to run business in Russia both in the upstream and downstream without any changes. We monitor the situation regarding the sanctions. But so far there have been no changes in either the business itself or in the business strategy,” the source said.

This interesting article was posted on the RIA Novosti Internet site at 7:45 p.m. Moscow time on Friday evening---and it's another contribution from Roy Stephens.

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Russia takes aim at McDonald's burgers as U.S. ties worsen

McDonald's burgers and shakes may become the latest victims of worsening ties between Moscow and Washington after a Russian consumer watchdog agency accused the U.S. chain of sanitary violations.

McDonald's Corp, which opened its first Russian restaurant in Moscow in 1990, became an iconic symbol of flourishing American capitalism during the fall of the Soviet Union.

But its Golden Arches may be in the Kremlin's crosshairs as ties between Moscow and Washington have fallen to their lowest point since the end of the Cold War with consecutive rounds of U.S. sanctions over Russia's role in the Ukraine crisis.

"We have identified violations which put the product quality and safety of the entire McDonald's chain in doubt," Anna Popova, the watchdog's head and Russia's chief sanitary inspector, was quoted by Interfax news agency as saying.

This Reuters news item, filed from Moscow, showed up on their Internet site at 11:19 a.m. EDT on Friday---and once again I thank Roy Stephens for sending it.

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Washington is Escalating the Orchestrated Ukrainian “Crisis” to War — Paul Craig Roberts

Despite the conclusion by U.S. intelligence that there is no evidence of Russian involvement in the destruction of the Malaysian airliner and all lives on board, Washington is escalating the crisis and shepherding it toward war.

Twenty-two U.S. senators have introduced into the 113th Congress, Second Session, a bill, S.2277, “To prevent further Russian aggression toward Ukraine and other sovereign states in Europe and Eurasia, and for other purposes.” The bill is before the Committee on Foreign Relations.

Note that prior to any evidence of any Russian aggression, there are already 22 senators lined up in behalf of preventing further Russian aggression.

Accompanying this preparatory propaganda move to create a framework for war, hot or cold with Russia, NATO commander General Philip Breedlove announced his plan for a deployment of massive military means in Eastern Europe that would permit lightening responses against Russia in order to protect Europe from Russian aggression.---and there we have it again: Russian Aggression. Repeat it enough and it becomes real.

This must read commentary put in an appearance on Paul's website on Thursday---and my thank go out to reader M.A. for bringing it to my attention, and now to yours.

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An Unprecedented Look Inside Iran From a Getty Photographer

Ever since Getty photographer John Moore visited Iran 10 years ago to cover parliamentary elections in Tehran, he's had an itch to experience the country behind the headlines. He finally got his chance this past June when he was approved to tour the country on a one-week trip from Shiraz to Tehran.

Mostly free from the constraints of traditional news — he did happen to document the 25th anniversary of the death of Ayatollah Khomeini along the way — Moore visited Iran’s most prominent cities, monuments, and squares for a look at the everyday life of average Iranians.

Though he had been pleasantly surprised by Iranian hospitality on his trip 10 years ago, he was again struck by how friendly, open, and hospitable most Iranians were to him, an American photographer documenting their country.

Well, dear reader, I know a number of people that come from Iran---and I know this might shock you, but they're people like you and I.  Iran and Turkey are two places I'd love to spend some time.  This photo essay, which has had over 260,000 hits, was posted on the Internet site on June 23---and it's the final offering of the day from Roy Stephens, for which I thank him.  Enjoy, because it's also worth your time.  The photo sequence on Afghanistan that follows is also worth looking at.  That photo sequence has had over 331,000 hits.

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Three King World News Interviews

1. Andrew Maguire: "Criminal" CME Colluded to Save Banks Short Gold"  2. Ronald-Peter Stoferle: "4 Astonishing Charts Show Gold May Finally Be Set to Soar"  3. Art Cashin: "Art Cashin Warns of Terrifying Black Swan and the Banking Crisis"

[Please direct any questions or comments about what is said in these interviews by either Eric King or his guests to them, and not to me. Thank you. - Ed]

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Gold price suppression elicits more notice

Evidence of gold price suppression ahead of futures contract options expiration abounds and is remarked upon in Friday's commentary by GoldCore's Mark O'Byrne.

I found this precious metal-related story in a GATA release yesterday.  It's definitely worth reading.

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London gold fix company appoints committee to oversee benchmark

The company operating the gold price 'fix' has appointed a supervisory committee to oversee the century-old system of benchmarking gold prices ahead of the implementation of stricter regulations, its website showed on Friday.

The London Gold Market Fixing Ltd's new board is made up of compliance officers at the four banks that currently set the twice-daily auction process over the telephone.

The appointment of the committee comes after the company said this month it was seeking a third party to take over administration of the process.

I thought this process was incestuous enough as it was, but this really takes it to a new level.  This Reuters story, filed from London, was posted on their Internet site at 6:40 a.m. EDT Friday morning---and it's the final offering of the day from reader M.A.

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The strange case of Germany's gold: An interview with Peter Boehringer

Interviewed by Andrew Schiff for the summer edition of Euro-Pacific Capital's Global Investor Newsletter, Peter Boehringer of the campaign to repatriate Germany's gold reserves explains how the recent Bloomberg News report on the issue was so misleading and elaborates on the fraud of the fractional-reserve gold banking system.

"One reason that the gold was unavailable for quick delivery," Boehringer says, "could be multiple ownerships of our bars at the Fed. Given today's global fractional gold banking scheme, an (allegedly physically existing) bar in a central bank vault could have more than 10 owners and could thereby show up in more than 10 central bank balance sheets as either 'physical gold' or 'gold claim.' These two completely different balance sheet items have not been properly differentiated for many decades now. We are potentially talking about non-existent physical bars at a magnitude of tens of thousands of tonnes."

The Euro-Pacific newsletter headlines the interview "The Strange Case of German Gold -- An Interview with Peter Boehringer" and it's posted about halfway down the newsletter.  It's definitely worth reading.  I found this gold-related news item on the Internet site yesterday---and I thank Chris Powell for wordsmithing "all of the above."

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Physical Gold Fund interviews Jim Rickards

July 2014 Interview with Jim Rickards on the June FOMC meeting, Yellen's July congressional testimony, Yellen is now stock picking, Efficient Markets theory is junk science, the bubble economy is headed for another crash, legal ramifications of USD transactions in non-US jurisdictions, in the next crisis you will be told you can not have your money when you ask for it, the term “Macro Prudential” means asset freeze or bail-in, new money market regulations allow for suspension of redemptions, the Fed is coming around to the view that a collapse is coming, regulators are exhibiting signs they expect another collapse, the Federal Reserve regional bank structure, FOMC driving policy, and the freezing or confiscation of 401k’s.

This 51-minute audio interview was posted on the Internet site very recently---and I thank Harold Jacobsen for finding it for us.  It's certainly worth listening to if you have the time.

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R1.2bn in gold ‘missing’ at Rand Refinery

Rand Refinery, processor of about a third of the world’s gold since 1920, found $113 million (R1.2 billion) less physical metal than the company had booked in its accounts after adopting a new computer system.

The refinery in Germiston, a town 20 kilometres east of Johannesburg, has 87,000 ounces of physical gold less than the amount present in its accounting records after “implementation difficulties” with the new system, the company said in a statement today.

That’s worth about $113 million at today’s price of $1,296 an ounce.

This article was all over the Internet yesterday.  This version appeared on the Internet site at 4:30 p.m. South Africa time---and it's the final contribution of the day from Elliot Simon.

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India's gold import restrictions turn into political patronage for trading houses

A war is brewing in the gold market with traders led by the All-India Bullion and Jewellers Association complaining to the Reserve Bank of India that its May 21 decision to allow premier and star trading houses to import gold for local sales has given half a dozen export houses a dominant position in the market and raised imports of the metal.

The RBI claimed that one of the complainants from the trade is likely to initiate action shortly, considering that the sharp rise in imports has happened during the traditionally slack month of June.

The trading houses strongly contested the claims of traders. They say the RBI's action had improved supplies and reduced the premium on gold, and that the traders' claims of the surge in gold imports are exaggerated.

This article, filed from Mumbai, appeared on the Economic Times of India website at 5:11 a.m. IST yesterday---and I found this in a GATA release yesterday.

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Indian gold imports fell 25% year over year---not counting smuggling, of course

Gold imports in 2013-14 stood at 638 tonnes, a decline of 25 per cent over the previous fiscal, Parliament was informed today.

The quantity of gold imported in 2012-13 was 845 tonnes and in 2011-12 it was 919 tonnes, Minister of State for Finance, Nirmala Sitharaman said in a written reply in the Lok Sabha.

In the April-June period of current fiscal, the quantum of gold import stood at 221 tonnes while in value terms it was Rs 54,792 crore, she said.

This gold-related story, filed from New Delhi, appeared on The Financial Express Internet site at 2:54 p.m. India Standard Time on their Friday afternoon---and it's another item I found over at the website site.

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Deutsche Bank, HSBC Accused of Silver Fix Manipulation

Deutsche Bank AG, HSBC Holdings Plc and Bank of Nova Scotia were accused in a lawsuit of rigging the price of billions of dollars in silver, an allegation similar to earlier suits involving the London gold fix.

The banks unlawfully manipulated the price of the metal and its derivatives, an investor claims in a complaint filed yesterday in federal court in Manhattan. The banks abused their position of controlling the daily silver fix to reap illegitimate profit from trading, hurting other investors in the silver market who use the benchmark in billions of dollars of transactions, according to the suit.

“The extreme level of secrecy creates an environment that is ripe for manipulation,” according to the complaint. “Defendants have a strong financial incentive to establish positions in both physical silver and silver derivatives prior to the public release of silver fixing results, allowing them to reap large illegitimate profits.”

It beats the hell out of me why JPMorgan isn't named in this lawsuit, as they're the ringleaders in all this.  However, Canada's Scotiabank is probably #2 on the list.  I won't be the only person interested in how this all turns out.  This story was posted on the Internet site in the wee hours of Saturday morning---and I thank U.K. reader Nigel Bunting for sliding it into my in-box at 10:41 a.m. BST, which works out to 5:41 a.m. EDT this morning.

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Jul 25, 2014

U.S. new-home sales hit three-month low

The U.S. Commerce Department reported that sales of new single-family homes fell 8.1% in June to a seasonally adjusted annual rate of 406,000, with drops across the country.

June’s result missed expectations from economists polled by MarketWatch, who had forecast a rate of 475,000, compared with an originally estimated pace of 504,000 for May. On Thursday, the government reported a sizable downward revision to its May figure, estimating a pace of 442,000.

New-home sales in June were down 11.5% from a year earlier.

This article appeared on their website at 11:20 a.m. EDT on Thursday---and it's worth reading---and the chart is worth the trip all by itself.  I thank Roy Stephens for his first contribution to today's column.

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Greenspan says bubbles can’t be stopped without ‘crunch’

Sitting in his office with a view of the Washington Monument in the distance, Greenspan is eager to share the insight distilled in his recent book, “The Map and the Territory,” due out in paperback this fall.

The interview has been edited for length and clarity.

MarketWatch: What is the biggest challenge facing the Fed?

Greenspan: How to unwind the huge increase in the size of its balance sheet with minimal impact. It is not going to be easy, and it is not obvious exactly how to do it.

MarketWatch: As the Fed is looking at the exit, do you think we can get through this without upsetting the economy?

Greenspan: I certainly hope so. I certainly think they will. But it is going to be difficult.

MarketWatch: Do you expect a sharp market reaction to the first hike?

Greenspan: Of course. Look what happened when the first indication of tapering occurred. Markets have always been sensitive. They reflect animal spirits.

I seem to remember Alan Greenspan saying that it was impossible to recognized a bubble when you were in one.  This 2-page interview showed up on the Internet site at 8:44 a.m. EDT yesterday---and it's the second story in a row from Roy Stephens.

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David Stockman: C’mon Alan! Bubbles Are Caused By Central Bankers, Not “Human Nature”

Alan Greenspan just cannot give up the ghost. During his baleful 18-year reign, the Fed was turned into a serial bubble machine—and thereby became a clear and present danger to honest free market capitalism and an enemy of the 99% who do not benefit from the Wall Street casino and the vast inflation of financial assets which it has enabled.  His legacy is a toxically financialized economy that has extracted huge windfall rents from main street, and left it burdened with overwhelming debts and sharply reduced capacity for gains in real living standards and breadwinner jobs.

Yet after all this time Greenspan still insists on blaming the people for the economic and financial havoc that he engendered from his perch in the Eccles Building. Indeed, posturing himself as some kind of latter day monetary Calvinist, he made it crystal clear in yesterday’s interview that the blame cannot be placed at his feet where it belongs: "I have come to the conclusion that bubbles, as I noted, are a function of human nature."

Stockman rips Greenspan a new one, but Greenspan's legacy, if you wish to dignify it with that name, is a target-rich environment---and the interview in the previous story was like saying "sic 'em" to a dog---and David jumped right in.  This commentary showed up on his website yesterday---and it's the third contribution of the day from Roy Stephens.

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M&M's, Snickers maker to raise chocolate prices 7 percent

Mars Chocolate North America, the maker of M&M's and Snickers, said on Wednesday that it will raise its prices by an average of 7 percent "to offset rising costs," its first increase in three years.

The price hike by Mars, which did not provide an effective date, follows Hershey Co, the No. 1 candy maker in the United States, which on July 15 raised its chocolate prices about 8 percent due to soaring commodity costs.

"In the three years since our last price increase, in March 2011, we have invested significantly in the category and have experienced a dramatic increase in our costs of doing business," a spokesperson said in an email to Reuters.

The cost of cocoa, a key ingredient in chocolate, has seen a meteoric rise in the past year, having climbed nearly 50 percent to a three-year high on Wednesday at $3,204 per tonne on ICE Futures. U.S. Dairy prices have also soared.

This short article put in an appearance on the Internet site at 3:50 p.m. Central Daylight Time on Wednesday---and I found it embedded in yesterday's edition of the King Report.

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600 million Apple devices contain secret back doors, researcher claims

A security researcher considered to be among the foremost experts in his field says that more than a half-billion mobile devices running Apple’s latest iOS operating system contain secret backdoors.

Jonathan Zdziarski, also known by his online alias “NerveGas,” told the audience attending his Friday morning presentation at the Hackers on Planet Earth conference in New York City that around 600 million Apple devices, including iPhones and tablets, contain hidden features that allow data to be surreptitiously slurped from those devices.

During Zdziarski’s HOPE presentation, “Identifying Back doors, Attack Points and Surveillance Mechanisms in iOS Devices,” the researcher revealed that several undocumented forensic services are installed on every new iPhone and iPad, making it easier that ever for a third-party to pull data from those devices in order to compromise a target and take hold of their personal information, including pictures, text messages, voice recordings and more.

This Russia Today article showed up on their Internet site at 8:08 p.m. on Wednesday evening Moscow time---and it's another offering from Roy Stephens.

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Stalled recovery leaves Europe defenceless against economic shock from Russia

Europe's economic recovery has stalled. The EMU policy elites took a fateful gamble that global growth alone would lift the eurozone off the reefs, without the need for serious monetary stimulus or a reflation package to ensure take-off velocity.

Their strategy has failed. The Bundesbank says German growth may have slumped to zero in the second quarter. French industrial output has fallen for three months in a row. French business surveys point to an outright contraction of GDP, with a high risk of a triple-dip recession.

Stagnation is automatically causing debt ratios to spiral upwards yet again across a large part of the currency bloc. The situation is doubly delicate since the European Central Bank is no longer able to serve as a lender-of last resort for Italy, Portugal and Spain.

This Ambrose Evans-Pritchard offering put in an appearance on the Internet site at 8:59 p.m. on Wednesday evening---and it's definitely worth reading.  It's another contribution of the day from Roy Stephens.

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Cameron claims export licenses allowing U.K. arms sales to Russia don’t breach embargo

UK Prime Minister David Cameron says Britain has not breached an embargo by selling military equipment to Russia, following MP demands to clarify the government’s position on UK-Russian arms deals.

The embargo was enacted “with immediate effect” on March 18 by then-Foreign Secretary William Hague.

Heated criticism of British arms deals with Russia emerged after a group of MPs revealed over 200 licenses allowing the sale of British military equipment to the Russian Federation. These revelations surfaced in a report published on Wednesday, conducted by four separate House of Commons committees.

The Committee on Arms Export Controls’ hard-hitting review contradicted a public statement by David Cameron on July 21. The Prime Minister had indicated the government had enforced an absolute arms embargo against Russia.

The meaning of the word hypocrisy is here, dear reader.  This Russia Today story appeared on their website at 3:04 p.m. Moscow time on their Thursday afternoon---7:04 a.m. in New York.  I thank Roy Stephens for finding it for us.

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Putin cronies get a week to pull their cash out of Britain as E.U. drags its feet

Russian oligarchs who are close to Vladimir Putin have a week to get their cash out of Britain before sanctions are imposed, it has emerged.

European Union officials started on Tuesday to prepare the list of businessmen and Moscow officials who will be targeted by the sanctions.

Philip Hammond, the Foreign Secretary, has made clear the Britain’s desperation to take action at those close to Mr Putin’s regime, saying "the cronies of Mr Putin and his clique in the Kremlin are the people who have to bear the pressure".

However, British sources disclosed that it will not be until the end of the month that all EU countries will have prepared their lists of individuals to be hit with the sanctions.

This article appeared on The Telegraph's website at 7:14 p.m. BST on Wednesday afternoon---and it's another story I found in yesterday's edition of the King Report.

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Germany begins spying on Britain and America for the first time since 1945

Chancellor Angela Merkel has ordered her counter-espionage services to begin surveillance of British and American intelligence gathering in Germany for the first time since 1945 in response to a series of U.S. spy scandals which have badly soured relations between Berlin and Washington.

The Süddeutsche Zeitung and two-state funded German TV channels, WDR and NDR, quoted an unnamed Berlin government source who said Ms Merkel’s Chancellery and her interior and foreign ministries had agreed to launch counter-espionage measures against Britain and the U.S. for the first time.

“Right now we need to send a strong signal,” the Süddeutsche Zeitung quoted the source as saying. The extraordinary measures are a direct response to a series of embarrassing U.S. and British spying scandals in Germany which began last year with revelations that the US National Security Agency had bugged Ms Merkel’s mobile phone.

The Chancellor protested on several occasions that she was “not amused” by the disclosures.

This news item, filed from Berlin, was posted on the Internet site on Thursday---and I thank South African reader B.V. for sending it our way.

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European rights court condemns Poland for hosting secret CIA prisons

The European Court of Human Rights (ECtHR) has ruled that Poland violated an international treaty to protect human rights by hosting secret CIA prisons on its territory.

The Strasbourg-based court ruled that Poland had contravened articles of the European Convention on Human Rights (ECHR) that cover torture, the right to liberty, and the right to an effective remedy for victims of crime.

The case was filed by two men, Saudi-born Abu Zubaydah, and Saudi national Abd al-Rahim al-Nashiri, who charge they were taken to a secret CIA black site in a Polish forest and subjected to treatment which amounted to torture. The men said at a hearing in December they had been brought to Poland in December 2002 with the knowledge of the Polish authorities. Both are now detainees at the U.S.-run Guantanamo Bay prison camp in Cuba.

This news item showed up on the Russia Today website at 8:29 a.m. Thursday morning Moscow time---and it's courtesy of Roy Stephens.

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Ukraine's Government Collapses, PM Yatsenyuk Resigns

As if Ukraine was not struggling through enough turmoil currently, Bloomberg reports that thefragile coalition government has collapsed after two parties quit. The UDAR and Svoboda parties said they’d leave the government and seek a snap parliamentary ballot. Tempers have been fraying recently as numerous brawls have broken out in parliament ahead of President Poroshenko's pledge to call elections this year. All we have to do now is find out who Washington would like to see in power?

The end result: Prime Minister Yatsenyuk just resigned. The big question now is what will the IMF do about the remaining tranches of its loans?

This story appeared on the Zero Hedge website at 3:36 p.m. EDT on Thursday---and I thank reader M.A. for finding it for us.  There was also a story about this on the RIA Novosti website.  It's headlined "Ukrainian Prime Minister Yatsenyuk Announces Resignation"---and it's from Roy Stephens.

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Ukrainian crisis will not split Russia and Europe - Medvedev

The Russian Prime Minister has acknowledged that relations with the E.U. have become more complicated, but assured foreign trade representatives that the situation in Ukraine would not become a barrier between Russia and Europe.

Despite the current crisis and the sanctions against Russian citizens and companies, Moscow is interested in further development of mutually beneficial relations with European nations, Dmitry Medvedev said in a speech on Wednesday.

This is true that the Ukrainian crisis has complicated our relations with the European Union. Sometimes these events are called a dividing ridge between Europe’s past and future. But this is not true for our country – the EU will remain our major trade partner for a long time and we value our reputation as a reliable supplier,” the Russian Prime Minister stated.

At the same time, Medvedev emphasized that Russia would use all lawful means to protect its business interests in the current complicated conditions.

This is another article from the Russia Today website.  This one was posted there at 1:44 p.m. Moscow time on their Wednesday afternoon---and the stories from Roy just keep on coming.

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State Dept. accuses Russia of firing artillery into Ukraine, refuses to provide any evidence

Government officials in the United States said Thursday that Russia is firing artillery across the border into Ukrainian territory, but refused to provide any evidence when grilled by an Associated Press reporter.

Matthew Lee, a veteran AP journalist known for his frequent showdowns with spokespeople during US State Department briefings, raised questions about the latest claims during Thursday’s scheduled press conference.

“We have new evidence that the Russians intend to deliver heavier and more powerful rocket launchers to the separatist forces in Ukraine, and have evidence that Russia is firing artillery from within Russia to attack Ukrainian military positions,” State Department spokeswoman Marie Harf told reporters during the Thursday afternoon briefing.

When asked by Lee for any evidence, however, Harf said the State Department is unwilling at this time to disclose further details because doing so could expose the secret intelligence operations involved in making such claims.

This Russia Today story showed up on their Internet site at 7:09 p.m Moscow time on Thursday evening---and I thank Roy Stephens once again.  It's worth reading.

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Russian Investigators Pledge to Hold Ukraine's Avakov, Kolomoyskyi Responsible for Crimes

Ukrainian Interior Minister Arsen Avakov and oligarch Ihor Kolomoyskyi will bear responsibility for their crimes, Russian Investigative Committee chief Alexander Bastrykin said Thursday.

“Avakov and Kolomoyskyi aren’t going anywhere. Sooner or later they will be held accountable for their criminal responsibility according to the norms of international law,” Bastrykin said.

As events in Ukraine continue to unravel, Russia is launching criminal cases against both individuals. The Russian Investigative Committee identified 2,700 victims in the criminal cases in the Ukrainian crisis, accusing Ukrainian Interior Minister Arsen Avakov and Dnipropetrovsk Region Governor Ihor Kolomoyskyi of organizing unlawful massacres.

This brief RIA Novosti news item, filed from St. Petersburg, was posted on their Internet site at 2:25 p.m. Moscow time on Thursday afternoon.  It's also courtesy of Roy Stephens.

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Sanctions 'wrong signal amid Kiev's punitive' military op - Ambassador

Russia’s ambassador to the UK hit out at planned sanctions on Moscow today, saying that they would be ‘illegal, unreasonable and counter productive’.

He said that sanctions would not serve the interests of he countries concerned, including the U.S., and would "trigger a long anticipated endgame of the present global crisis".

Speaking at a press conference in London on Friday, Alexander Yakovenko told the media that imposing sanctions would send the “wrong message to Kiev’s continued “punitive operation” in Eastern Ukraine.

He said there was ‘no evidence that Russia supplied weapons to separatists, adding that Ukraine and the West’s suggestions on who was responsible for the crash of flight MH17 ‘don’t hold water’.

This is another news item from the Russia Today website.  This one appeared on their Internet site at 2:30 p.m. Moscow time on Thursday---and is definitely worth reading, especially the contents of the second paragraph highlighted above.  One wonders what he meant by that?  I thank Richard Cashmore for bringing it to our attention.

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$200 per barrel oil if Russia sanctions escalate: Oxford Economics

If the standoff with Russia and the West reaches a point where the E.U. has to completely cut trade with Russia, oil prices could soar above $200 per barrel, sparking a global economic crisis, says Adam Slater, senior economist at Oxford Economics.

Cutting off trade with Russia, the world’s second largest oil exporter, would create a shortage in global energy supplies, which would have spillover effects into Europe, Slater told The Guardian.

The E.U. buys 84 percent of Russian oil exports, and 76 percent of natural gas exports. About a quarter of European countries completely rely on Russia for gas or oil supplies.

As of yet, Russia hasn’t halted European gas supplied through politically unstable Ukraine, but this event itself could trigger “stage three”, or trade-specific sanctions.

This commentary put in an appearance on the Russia Today Internet site at 10:16 a.m. Moscow time on Wednesday morning---and it's the final contribution of the day from Roy Stephens, for which I thank him.

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No One Wants Russia to Host the 2018 World Cup

Peter Beuth, interior minister of the German state of Hesse, has said, "If Putin doesn’t actively cooperate on clearing up the plane crash, the soccer World Cup in Russia in 2018 is unimaginable." Michael Fuchs, a senior leader in Angela Merkel's Christian Democrats party agreed, saying, "FIFA football association should think about whether Moscow is an appropriate host if it can’t even guarantee safe airways." 

This comes just days after six players of the Donetsk soccer team refused to leave France after a match and board a plane back to Ukraine.

The Netherlands Football Association is also suggesting the 2018 World Cup could be moved.

This is all getting rather childish---Russia guilty without a shred of evidence.  You'd think that grown men would know better, but obviously not.  This article appeared on Internet site at 3:21 p.m. EDT on Wednesday---and I thank reader Victor George for sharing it with us.

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9 Things We Just Learned About Vladimir Putin's Life

A new article in Newsweek provides quite a bit of insight into Russian President Vladimir Putin's daily routine and private life.

The writer, Ben Judah, spent three years interviewing those close to Putin for his book "Fragile Empire: How Russia Fell In and Out of Love with Vladimir Putin."

Judah's insights into Putin's life come from former prime ministers, current ministers, regional governors, senior bureaucrats, close advisers, and personal aides to the president.

This very interesting commentary showed up on the Internet site at 11:18 a.m. EDT on Wednesday morning---and I thank Harry Grant for sending it our way.

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Japan Trade Deficit Expands After Exports Unexpectedly Drop

Japan’s exports unexpectedly fell in June to swell the trade deficit more than forecast, dragging on an economy squeezed by a sales-tax increase in April.

Exports shrank 2 percent from a year earlier, the finance ministry said in Tokyo today, compared with a median forecast of a 1 percent rise in a Bloomberg News survey of 29 economists. Imports rose 8.4 percent to leave a shortfall of 822.2 billion yen ($8.1 billion), surpassing a 643 billion yen projection.

Exports fell 1.7 percent by volume, showing the yen’s 16 percent drop against the dollar since Prime Minister Shinzo Abe came to power in December 2012 has failed to boost outward shipments. They remain 23 percent lower by value than a peak in March 2008, in contrast to the U.S. where they grew 25 percent over the same period.

This short Bloomberg news item, filed from Tokyo, showed up on their website at 1:31 a.m. Denver time on Thursday morning---and it's the third and final story that I 'borrowed' from yesterday's edition of the King Report.

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Four King World News blogs/audio interviews

1. Egon von Greyerz: "Shocking Charts Show That Gold is Set to Skyrocket"  2. William Kaye: "Marc Faber, Gold, Silver---and the Horrific Endgame For Markets"  3. Hugo Salinas Price: "Elites Plan to Control Humanity"  4. The audio interview is with Michael Pento

[Please direct any questions or comments about what is said in these interviews by either Eric King or his guests to them, and not to me. Thank you. - Ed]

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Lawsuit charges that half of Chicago futures are illegal 'wash' trades

Since March 30 of this year when bestselling author, Michael Lewis, appeared on 60 Minutes to explain the findings of his latest book, Flash Boys, as “stock market’s rigged,” America has been learning some very uncomfortable truths about the tilted playing field against the public stock investor.

Throughout this time, no one has been more adamant than Terrence (Terry) Duffy, the Executive Chairman and President of the CME Group, which operates the largest futures exchange in the world in Chicago, that the charges made by Lewis about the stock market have nothing to do with his market. The futures markets are pristine, according to testimony Duffy gave before the U.S. Senate Agriculture Committee on May 13.

On Tuesday of this week, Duffy’s credibility and the honesty of the futures exchanges he runs came into serious question when lawyers for three traders filed a Second Amended Complaint in Federal Court against Duffy, the Chicago Mercantile Exchange, the Chicago Board of Trade and other individuals involved in leadership roles at the CME Group.

From watching and listening to what Mr. Duffy has had to say over the years, it has convinced me that he's not the sort of person that you would want to leave your pet, or a small child with, for any length of time.  This commentary was showed up on the website yesterday---and falls into the must read category.  I found it posted on the Internet site yesterday.

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A Chinese Gold Standard?

While the 70th anniversary of D-Day last month received a lot of attention, another event, in July 1944 — the Bretton Woods conference, named for the mountain resort in New Hampshire where it was held — was perhaps even more significant in shaping the modern world. It not only led to the creation of what are now the International Monetary Fund and the World Bank, but it also confirmed the central position of the United States dollar in the international monetary system.

Why does this matter for us now? Just as America displaced Britain as the world’s pre-eminent economic power in the interwar period, so, too, the large debts and fiscal pressures confronting the West, and the rise of China and other economic powers, challenge us to think about the future of finance.

For most of the 19th century the British pound had been the world’s “reserve currency,” the currency in which trade and finance were denominated. “As sound as a pound” became a widely used expression. The pound was pegged to gold at a fixed rate of just under £4 per ounce.

At the outbreak of World War I, Britain abandoned the gold standard. You could no longer exchange pounds for gold. The gold standard was reintroduced in 1925, but this, as John Maynard Keynes observed, proved to be an economic mistake.

This opinion piece, filed from London, showed up on The New York Times website yesterday sometime---and I thank Phil Barlett for sending it our way.

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Zero Hedge pokes excellent fun at Peter Hambro

The ongoing transition of gold price manipulation from conspiracy theory to conspiracy fact just escalated as Bloomberg reports, Peter Hambro, chairman of Russia's 2nd largest gold producer Petropavlovsk Plc, said he was "horrified" by the manipulation of the London fix given its importance to the industry. One wonders just how many of these individuals, involved in the manipulation, Hambro is dinner-party friends with?

While we believe Hambro is right to be "horrified;" after 10 years of manipulation (downwards at least two-thirds of the time in six different years between 2004 and 2013. In 2010, large moves during the fix were negative 92 percent of the time), we suspect he knew something was going on...

I posted the Bloomberg story on which this ZH piece is based in my Wednesday column---and here is what I had to say about it then---"Hambro is more than aware of the price management scheme in gold and the other precious metals, so his comments are certainly disingenuous---and that's being kind."  He, like every other precious metal mining executive, is complicit by their silence.  But it's my opinion that he's more complicit than most.

This Zero Hedge item appeared on their website at 7:04 p.m. EDT yesterday evening---and it's a must read for sure.  I thank GATA's Chris Powell for the headline, but the first reader through the door with the story was Phil Barlett.

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Jul 24, 2014

Atlantic City’s Credit Rating Cut Two Steps to Junk by Moody’s

The reduction to Ba1 from Baa2 on the city’s $245 million of general-obligation debt reflects a weakened tax base resulting from anticipated casino closings, the New York-based ratings company said today in a statement. The outlook remains negative.

“The downgrade to Ba1 reflects the city’s significantly weakened tax base, revenue-raising ability and broader economic outlook,” analysts Vito Galluccio and Julie Beglin said in the statement. “These result from ongoing casino revenue declines, expected near-term casino closures, and the impact of sizable casino tax appeals, all of which has stemmed from increased competition from casinos in neighboring states.”

Atlantic City lost its regional monopoly as states including Pennsylvania, Maryland and New York legalized casinos or expanded betting to increase tax revenue. Casino revenue in the city has dropped for seven straight years, falling to $2.86 billion last year from a high of $5.07 billion in 2006, according to Bloomberg Industries.

The city’s 11 gambling houses account for almost half its jobs: 5,883 positions in a workforce of 13,500. The Atlantic Club closed in January, putting 1,600 people out of work. The closing of Caesars Entertainment Corp.’s Showboat on Aug. 31 will wipe out 2,133 jobs. Trump Plaza Hotel & Casino said it plans to close Sept. 16, taking away another 1,009. Revel, the $2.4 billion complex that employs 3,106 people, is seeking a buyer in bankruptcy.

This short Bloomberg news item, filed from Trenton, N.J., was posted on their Internet site at 3:20 p.m. Denver time yesterday---and today's first story is courtesy of Howard Wiener.

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Illinois Workforce Shrinks By Largest Margin in State History

In June, Illinois suffered the largest monthly workforce loss in recorded state history.

June’s workforce loss was worse than the worst month of the Great Recession. Overall, 21,700 Illinoisans gave up and left the workforce in June; in September 2008, 17,500 Illinoisans quit the workforce.

This hefty workforce loss has driven state’s unemployment rate down to 7.1% from 7.5%, creating a superficial appearance of improvement. And Gov. Pat Quinn says Illinois needs to “keep the momentum.”

Keeping up this sort of “momentum” would be disastrous.

This news item appeared on the Internet site on Sunday---and it's something I found in yesterday's edition of the King Report.

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Jobs Hold Sway Over Yellen and Carney as Central Banks Splinter

Before the Federal Reserve and fellow central banks go to work raising interest rates, they first need others to go to work.

That’s the signal from policy makers worldwide, as even those whose mandates focus on inflation put the health of labor markets at the heart of their decision making. The approach leaves investors bracing for global monetary policies to diverge after the post-crisis embrace of easy money.

Accelerating job creation -- and the hope this will spur wages -- leaves the U.S. central bank and the Bank of England preparing for higher rates by the end of 2015. At the other end of the spectrum, double-digit unemployment in the euro area and stagnant pay in Japan mean stimulus remains the only option.

Nothing has changed, dear reader, as it's still "print or die"---and forget about higher interest rates anytime this year or next.  Even a hint of an imminent interest rate hike would crush the bond market.  This longish Bloomberg article, co-filed from Washington and London, was posted on their Web site at 3:25 a.m. MDT on Wednesday morning---and it's courtesy of West Virginia reader Elliot Simon.

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The "Gates" Are Closing: SEC Votes Through Money Market Reform

It was nearly five years ago when Zero Hedge first wrote: "This Is The Government: Your Legal Right To Redeem Your Money Market Account Has Been Denied" in which we predicted as part of the ongoing herding of investors away from every other asset class and into stocks, regulation will be implemented to enforce that "money market fund managers will have the option to 'suspend redemptions to allow for the orderly liquidation of fund assets" or in other words implement redemption "gates." The logic: spook participants in the $2.6 trillion money market industry with the prospect of being gated (i.e., having no access to ones funds) and force them to reallocate funds elsewhere.

Moments ago the gates arrived, when following a close 3-2 vote (with republican commissioner Piwowar and democrat Stein dissenting), the SEC adopted new rules designed to curb the risk of investor runs on money market funds, capping the end of a years-long heated debate between regulators and the industry dating to the financial crisis according to Reuters.

Among the changes, funds will have to switch to a floating share price instead of the current $1/share (hence the term breaking the buck). But the key part: "The SEC's rule will require prime money market funds to move from a stable $1 per share net asset value, to a floating NAV. It also will let fund boards lower redemption "gates" and fees in times of market stress."

This longish piece appeared on the Zero Hedge Web site at 1:18 p.m. EDT yesterday afternoon---and I thank Dr. Dave Janda for sending it around.

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Tale of the Tapes: IRS Head Confirms Investigators Have Found Backup Tapes in Lerner Probe

The head of the IRS confirmed Wednesday that investigators looking into missing emails from ex-agency official Lois Lerner have found and are reviewing "backup tapes" -- despite earlier IRS claims that the tapes had been recycled. 

IRS Commissioner John Koskinen, testifying before a House oversight subcommittee, stressed that he does not know "how they found them" or "whether there's anything on them or not." But he said the inspector general's office advised him the investigators are reviewing tapes to see if they contain any "recoverable" material. 

The revelation is significant because the IRS claimed, when the agency first told Congress about the missing emails, that backup tapes "no longer exist because they have been recycled." 

It is unclear whether the tapes in I.G. custody contain any Lerner emails, but Koskinen said investigators are now checking.

Tapes in this day and age?  Would they be cassette, 8-track, or reel-to-reel?  Just asking.  This Fox News item showed up on their Web site yesterday sometime---and I thank reader M.A. for sending it our way.

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Super bear Marc Faber: Here Are the Markets I Like

Investment guru Marc Faber, famed for his gloomy views on financial markets, took some time out from being the voice of doom on Wednesday to highlight areas of the market that he actually liked.

On CNBC Asia's Squawk Box, the author of the Gloom, Boom and Doom Report singled out the agriculture sector, Chinese and Hong Kong stocks and precious metals as places he thought investors should put their money into.

"In general I like plantation companies – I like everything to do with agriculture," said Faber, who is also widely known as Dr. Doom.

This 3:54-minute video clip was posted on the CNBC Web site late yesterday morning Hong Kong time---and I thank reader Ken Hurt for sharing it with us.

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UK Hastens Negotiations for Currency-Rigging Settlement

Talks to reach the first settlement in the currency-rigging probe are accelerating, with Britain's markets regulator preparing to reach a deal with a group of banks this year, people with knowledge of the talks said.

The Financial Conduct Authority is in talks with banks including Barclays Plc, Citigroup Inc., JPMorgan Chase & Co., and UBS AG, said the people, who asked not to be identified because the discussions are private. Royal Bank of Scotland Group Plc and HSBC Holdings Plc may also be part of the group settlement, one of the people said.

The FCA is trying to fast-track the process and may levy any fines in the coming months, three of the people said. The watchdog is seeking to keep the scope of the deal narrow to speed up the settlement, two of the people said.

The talks are still continuing and an agreement may stretch into next year, the people added.

This article showed up on the Bloomberg Web site at 5 p.m. MDT yesterday afternoon, but it was posted there earlier than that because I received it in a GATA release at 12:37 p.m. MDT.

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Defying UK, France to Proceed with Warships Sale to Russia

French Foreign Minister Laurent Fabius responded with a strong dose of sarcasm to British criticism of France’s planned sale of two warships to Russia, saying the UK should put its own house in order before criticising others.

British Prime Minister David Cameron said Monday that Paris’s plan to press ahead with the €1.2 billion ($1.7 billion) order of two French warships following the downing of Malaysia Airlines flight MH17 in Ukraine would be “unthinkable” in Britain.

“The English, in particular, were very pleasant so to speak, saying, 'We would never do that'. But I told my dear British friends, let’s talk about the financial sector,” Foreign Minister Laurent Fabius told TF1 television after returning from a European foreign ministers meeting in Brussels.

“I am led to believe that there are quite a few Russian oligarchs in London,” he said.

When asked if that meant Britain should take care of its own business first, Fabius said: “Exactly.”

This is a big "UP YOURS!" with a French twist.  It was posted on the Internet site yesterday sometime---and it's the first offering of the day from Roy Stephens.

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Europe Braced for Any Gas Crisis as Russia Sanctions Escalate

Europe has enough spare capacity in liquefied natural gas (LNG) to meet a large part of the region’s needs if Russia retaliates against the latest EU sanctions by restricting gas supplies.

The showdown with Russian president Vladimir Putin comes at moment of surging global supplies of LNG, which can be diverted to European markets and reduce the Kremlin’s political leverage. The price of LNG in Asia has crashed from $20 to $11 per million British thermal unit (BTU) since February.

The pan-EU group Gas Infrastructure Europe said the network of LNG terminals in Britain and the Continent is currently operating at just 20% of its full capacity. It could in theory boost flows by 160bn cubic metres (BCM), if there is available gas.

This is more than Russia’s entire shipments, which reached 155 BCM last year. The European network of pipelines does not cover every region and would leave pockets in eastern Europe without supply.

What b.s.!!!  This is wall-to-wall disinformation, but Ambrose Evans-Pritchard is always one to stoop to the occasion when it does arise---and when his master calls.  This commentary was posted on the Internet site at 10:20 p.m. BST on Tuesday evening.

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Black Boxes of Crashed Malaysian Plane to Be Deciphered in 2 Days

It will take about two days to retrieve and decipher data from flight recorders of the Malaysian airliner that crashed in eastern Ukraine last week killing nearly 300 people, a spokesman for the UK Department for Transport told reporters Wednesday.

Air Accidents Investigation Branch experts in Farnborough, Hampshire, will study the flight data recorders, known commonly as black boxes. The spokesman said that the process might take about two days, depending on their condition.

“Experts received flight recorders at the lab in Farnborough, Hampshire. Experts will attempt to extract data from the recorders at the request of Dutch authorities, which are conducting the investigation. Based on the damage [to black boxes] the process can take about two days,” the spokesman said.

He stressed that he was only referring to the extraction of data from the flight recorders and its transfer to the Netherlands, not about the conclusions about the cause of the crash. One of the flight recorders stored technical parameters of the plane, while the other recorded the sounds on board.

This RIA Novosti news item, filed from London, was posted on their Internet site at 3:53 p.m. yesterday afternoon Moscow time, or 7:53 a.m. New York time.

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Crashed MH17 Flight "Was 300 Miles Off Typical Course"

Robert Mark, a commercial pilot who edits Aviation International News Safety magazine, said that most Malaysia Airlines flights from Amsterdam to Kuala Lumpur normally travelled along a route significantly further south than the plane which crashed.

Malaysia Airlines has insisted its plane travelled on an "approved route" used by many other carriers.

But Mr Mark said: "I can only tell you as a commercial pilot myself that if we had been routed that way, with what's been going on in the Ukraine and the Russian border over the last few weeks and months, I would never have accepted that route.

"I went into the FlightAware system, which we all use these days to see where airplanes started and where they tracked, and I looked back at the last two weeks' worth of MH17 flights, which was this one---And the flight today tracked very, very much further north into the Ukraine than the other previous flights did...there were MH17 versions that were 300 miles south of where this one was."

This story appeared in The Telegraph a week ago, but it's still worth your time.  I thank Harry Grant for sending it along at midnight MDT last night.

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The Saker: The Most Pathetic Case of Backpedaling I Have Seen in My Life

Senior U.S. intelligence officials said Tuesday that Russia was responsible for "creating the conditions" that led to the shooting down of Malaysia Airlines Flight 17, but they offered no evidence of direct Russian government involvement.

The intelligence officials were cautious in their assessment, noting that while the Russians have been arming separatists in eastern Ukraine, the U.S. had no direct evidence that the missile used to shoot down the passenger jet came from Russia.

The officials briefed reporters Tuesday under ground rules that their names not be used in discussing intelligence related to last week's air disaster, which killed 298 people.

The plane was likely shot down by an SA-11 surface-to-air missile fired by Russian-backed separatists in eastern Ukraine, the intelligence officials said, citing intercepts, satellite photos and social media postings by separatists, some of which have been authenticated by U.S. experts.

But the officials said they did not know who fired the missile or whether any Russian operatives were present at the missile launch. They were not certain that the missile crew was trained in Russia, although they described a stepped-up campaign in recent weeks by Russia to arm and train the rebels, which they say has continued even after the downing of the commercial jetliner.

Have you counted the "caveat words"?  I counted 15 (depending on what you want to include).  Notice that they consider the Ukie missile as "implausible" but that they never explain why this would be implausible.  And they admit relying in part on social media and Ukie government info?  How absolutely utterly pathetic.  I mean - I feel sorry for them.  For any self-respecting intelligence official to admit such things is to commit a seppuku of your professional pride.  It's admitting that you are an amateur and a drooling moron.  And here is the deal - I very much doubt that these men are amateurs or morons.  So, yet again, they were back-stabbed by imbecile politicians like Obama and Power who just are not used to consulting with their own specialist before flapping their lips and never mind if they make an entire intelligence community look like cretins.

But of course the big news here is this: the U.S. fairy tale about Putin the terrorist is falling down in flames.  Yet again the Neocons by their sheer arrogance, hubris and boundless stupidity manged to lie their way into a corner from which there is no exit.  Not that the U.S. had much street-cred anyway, not after Colin Powell's dishwasher powder in a vial at the UNSC.  But, of course, there is bad, very bad, even worse and outright terrible.  But now the U.S. has reached the "terminal" stage.  The AngloZionists sure had this one coming.

And I couldn't agree more!  This must-read commentary showed up on the Web site yesterday---and I thank Roy Stephens for sending it our way.

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Pepe Escobar: A Chessboard Drenched in Blood

"The intelligence and facts were being fixed around the policy." Everyone remembers the Downing Street Memo, which unveiled the Bush/Blair "policy" in the run-up to the 2003 bombing/invasion/occupation of Iraq. The "policy" was to get rid of Saddam Hussein via a lightning war. The justification was "terrorism" and (non-existent) weapons of mass destruction (WMD), which had "disappeared", mounted in trucks, deep into Syria. Forget about intelligence and facts.

The tragedy of MH17 - turned, incidentally, into a WMD - might be seen as a warped rerun of imperial policy in Iraq. No need for a memo this time. The "policy" of the Empire of Chaos is clear, and multi-pronged; diversify the "pivot to Asia" by establishing a beachhead in Ukraine to sabotage trade between Europe and Russia; expand the North Atlantic Treaty Organization to Ukraine; break the Russia-China strategic partnership; prevent by all means the trade/economic integration of Eurasia, from the Russia-Germany partnership to the New Silk Roads converging from China to the Ruhr; keep Europe under US hegemony.

The key reason why Russian President Vladimir Putin did not "invade" Eastern Ukraine - as much as he's been enticed to by Washington/NATO - to stop a U.S. military adviser-facilitated running slaughter of civilians is that he does not want to antagonize the European Union, Russia's top trading partner.

Crucially, Washington's intervention in Kosovo invoking R2P - Responsibility to Protect - was justified at the time for exactly the same reasons a Russian intervention in Donetsk and Luhansk could be totally justified now. Except that Moscow won't do it - because the Kremlin is playing a very long game.

Here's another must read for you today.  It was posted on the Asia Times Internet site yesterday---and it's another contribution from Roy Stephens.

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David McWilliams: Deadly Game of Human Chess

When seen from the Russian perspective, Ukraine is just another example of the gradual but definitive encroachment of the West into all things Russian. Russia and Ukraine are not different cultures. They are part of the same broader Russian/Slavic family. Our narrative is that the Russians are happy to keep Ukraine unstable and that what happened to the Malaysian airliner was the risk Russia was running by arming the separatists with sophisticated weapons.

Seen from the Russian side, it isn’t the Russians who are doing the destabilising but the Americans.

For them, the Americans arming and financially supporting an opposition in Ukraine would be like the Scottish Nationalists being financed by Russia. How do you think London and Washington would react to that? How do you think they’d react to the idea of a Russian puppet running an independent Scottish state from Edinburgh?

This is how close Ukraine is to Russia.

Now when you think about it in those terms, do you think Putin will back down and do what the West wants him to do?

This commentary by David McWilliams also falls into the must-read category---and it was posted on his Web site on Monday.  I thank reader M.A. for bringing this article to our attention.

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Why Putin Isn't Afraid of Europe

Why can't Europe's leaders bring themselves to impose tough sanctions on Russia after the Malaysia Airlines passenger jet disaster? One explanation is that economic ties to Russia, a major supplier of energy, trump the moral imperative to punish President Vladimir Putin for his support of separatists in Ukraine.

A look at trade data for selected European countries offers an indication of the incentives in play. The Netherlands, which had 193 citizens aboard Flight MH17, is among the most connected: Russia accounted for about 6.4% of its imports in the 12 months through February, according to data compiled by Bloomberg. Germany, the most politically powerful country in Europe, is roughly three times more tied to Russia than the U.S. or the U.K., which have been much more aggressive in pushing sanctions.

Europe's economic ties to Russia are much stronger than they were when Putin came to power. Back in February 1999, soon after he took over from former President Boris Yeltsin, Russia's share of German exports and imports was less than half what it is today. Apparently, building new pipelines to Europe has served Russia's geopolitical interests well.

This opinion piece by Mark Whitehouse showed up on the Bloomberg Internet site at 1:50 p.m. EDT on Wednesday afternoon---and once again I thank Roy Stephens for sending it.

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Putin Recalls State Duma From Vacation, "Planning Something" on Ukraine Situation

In a somewhat disconcerting move, Russian President Vladimir Putin has recalled The State Duma from a planned vacation to participate in an unscheduled meeting because of the situation in eastern Ukraine. As Ukrinform reports, sources confirm "Something is being planned, because many deputies come, probably for a quorum." Rumors are spreading that Putin is set to issue Kiev an ultimatum over recognizing separatists or face military intervention.

Given that Poroshenko has demanded the separatists be labeled "terrorists" under international law, we suspect this is one demand they cannot fulfill... and of course, Ukraine is claiming that the 2 fighter jets shot down this morning were shot down by and from Russia... sure, with the whole world watching, Putin would do that?

This very interesting news item appeared on the Zero Hedge website at 11:46 a.m. EDT yesterday morning---and I thank Bill Busser for finding this for us.

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Opening Remarks of Vladimir Putin at the Russian Security Council Meeting

Note: normally the meetings of the Russian Security Council are held behind closed doors.  This time, however, the press was allowed in just to record the beginning of the opening remarks of Vladimir Putin.  Then the press was asked to leave.  Clearly, this is intended as a message to the Russian people.  I have bolded out the part which appear the most important to me. - The Sakar

Good afternoon, colleagues.

Today we will consider the fundamental issues of maintaining the sovereignty and territorial integrity of this country. We all understand how many political, ethnic, legal, social, economic and other aspects this topic encompasses.

Sovereignty and territorial integrity are fundamental values, as I have already said. We are referring to the maintenance of the independence and unity of our state, to the reliable protection of our territory, our constitutional system and to the timely neutralization of internal and external threats, of which there are quite a few in the world today. I should make it clear from the start that, obviously, there is no direct military threat to the sovereignty and territorial integrity of this country. Primarily, the strategic balance of forces in the world guarantees this.

We, on our part, strictly comply with the norms of international law and with our commitments to our partners, and we expect other countries, unions of states and military-political alliances to do the same, while Russia is fortunately not a member of any alliance. This is also a guarantee of our sovereignty.

These longish remarks by Vladimir Putin were posted on the website yesterday sometime---and worth reading if you have the time.  It's also courtesy of Roy Stephens.

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China’s Terrifying Debt Ratios Poised to Breeze Past US Levels

The China-US sorpasso is looming. I do not mean the much-exaggerated moment when China’s GDP will overtake America's GDP – which may not happen in the lifetime of anybody reading this blog post – as China slows to more pedestrian growth rates (an objective of premier Li Keqiang.)

The sorpasso may instead be the ominous moment when China’s debt ratios overtake the arch-debtor itself.

I had presumed that this inflection point was still a very long way off, but a new report from Stephen Green at Standard Chartered argues that China’s aggregate debt level has reached 251% of GDP, as of June.

This is up 20 percentage points of GDP since late 2013. The total is much higher than normal estimates, though it tallies with what I have heard privately from officials at the IMF and the BIS.

This Ambrose-Evans Pritchard blog appeared on The Telegraph's Web site on Tuesday sometime---and it's the final offering of the day from Roy Stephens.

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Four King World News Blogs

1. Michael Pento: "This is the Timeline For the Terrifying Endgame of Destruction"  2. Frank K: "Switzerland Has Exported a Shocking Amount of Gold to Asia"  3. Investors Intelligence: "Here is the Chart That Has the Central Planners Worried"  4. William Kaye: "Is This the Real Reason Why Malaysian MH17 Was Shot Down?"

[Please direct any questions or comments about what is said in these interviews by either Eric King or his guests to them, and not to me. Thank you. - Ed]

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A Revolving Door Farce: CFTC Commissioner Bails to Head Regulator's Biggest Opponent

There is no better way to describe what the recently departed CFTC commissioner Scott O'Malia just did when he bailed from the commodity watchdog to become the new head of the International Swaps and Derivatives Association, aka ISDA, the biggest banking group that has constantly opposed every intervention and attempt to regulate the swaps market by the CFTC since the Lehman crisis, than an epic farce.

For those who are unaware ISDA is a global OTC derivative lobby group, counting the world's largest investment banks among its members, and has frequently fought regulatory efforts to reform the market after the financial crisis. ISDA itself was exposed as a complete joke during the European crisis when due to the overhang of avoiding Europe's insolvent reality, it made CDS protection obsolete as protection from sovereign restructurings and credit events, in the process crushing one of the key ways to hedge for credit event risk.

Even an otherwise impartial Reuters appears outraged by this blatant and painfully clear example of government capture of "public servants" by those who have dangle carrots of money in exchange for lobby (and future employment promise) favors, and thus set the rules, courtesy of people like O'Malia.

If there was any more proof needed that the CFTC is a compromised and crooked organization, here it is.  O'Malia handed in his notice on Tuesday---and look where he is 24 hours later.  This Zero Hedge piece was posted on their Web site at 11:29 a.m. EDT on Wednesday morning---and I thank Phil Barlett for sending it our way.

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US Gold ETF Delivers First Physical Bullion Coins; Holdings Grow

Merk Gold Trust, a bullion-backed exchange-traded fund that allows its shares to be redeemed for physical gold, said on Wednesday it has made its first delivery in dozens of U.S. gold coins to an investor.

The ETF, launched by Palo Alto, California-based Merk Funds in May to offer a liquid trading product with the benefits of physical gold bullion, has accumulated 40,000 ounces in two months even in a bearish gold market.

The fund, trading on the NYSE Arca platform with the ticker OUNZ, owns less than 1 percent of gold held by SPDR Gold Shares , the world's biggest gold ETF. However, many participants are warming to the idea that the product could bridge the gap between the physical and paper gold markets.

This very interesting Reuters piece, filed from New York, showed up on their Internet site at 3:46 p.m. EDT on Wednesday afternoon.  I found it embedded in a GATA release late last night MDT.

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Smoking Out Indian Gold, Central Bank Relaxes Loan Rules

In a major relief, the Reserve Bank of India has relaxed the limit of loan that banks can sanction against the pledging of gold ornaments and jewellery, and where the end use of the loan is not for agricultural purposes.

The move is expected to protect the interest of the customers who can continue to opt for gold loans based on merits of the case, rather than rely on the loan to value ratio. The RBI has however retained the loan to value ratio at 75% of the value of gold.

The apex bank has left it to individual banks to decide on a lending cap. On December 30, the apex bank had restricted loans with a cap of $1,661 (Rs 100,000) against the pledge of gold ornaments and jewellery.

With many individuals pledging household gold ornaments to avail of personal loans, the aim is also to smoke out gold lying within homes and bank lockers across the country, said analysts.

This news item, filed from Mumbai, put in an appearance on the Internet site on Wednesday sometime---and it's worth skimming.

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Kalgoorlie's Golden Hotel Prices

Car dealers, doctors and now a hotel in Western Australia's Kalgoorlie are accepting payments of gold.

Weary travelers will be able to pay to rest their head at a hotel in the wild west Goldfields town of Kalgoorlie with gold.

Rydges Kalgoorlie Resort and Spa general manager Nicholas Parkinson-Bates said while the idea to allow people to pay for a room with the precious metal was inspired by the annual Diggers and Dealers mining conference in August, he was keen to extend the payment method for life.

This short gold-related news item was posted on The West Australian Web site yesterday at 6:16 p.m. local time 'down under'---and it found a home over at the Internet site.  I thank reader Michael Donovan for sliding it into my inbox yesterday morning.

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